Proposed GOP tax increase could backfire in Springfield
By Greg Bishop
Illinois News Network
Lawmakers will be back for a special session next week and on the table will be a proposal backed by leading Republicans to increase taxes by $5 billion. Some warn that would lead to a continued exodus of Illinois residents and businesses and could backfire politically.
Because lawmakers blew through the May 31 deadline to pass a budget with a simple majority, it now takes a three-fifths vote in both chambers to pass legislation, including a budget. That means for a tax hike plan to pass the House, only four Republican “yes” votes are needed to reach that threshold if all Democrats are on board.
House Minority Leader Jim Durkin, R-Western Springs, said he’s willing to get those votes on the board.
State Rep. Jeanne Ives, R-Wheaton, said she will not be one of those “yes” votes.
“We need a budget that spends only what we take in and we need to give the governor full authority to realign and redo all of the programs under the state’s umbrella and spend what we take in,” Ives said, adding that she’s disappointed by GOP leadership for being willing to exchange a tax increase for some reforms she said don’t go far enough.
According to the state’s bipartisan government forecasting group, Illinois is expected to bring in about $31 billion in the fiscal year that begins July 1. The GOP plan would cap spending at $36 billion annually for four years. That would rely on a four-year income tax increase and expansion of various service taxes, though it’s unclear how the Senate’s tax increase plan would be amended.
The plan approved by Senate Democrats last month would permanently raise the state’s income tax by 32 percent, from 3.75 percent to 4.95 percent, and be retroactive to Jan. 1. That plan was never voted on by the full House. Under the new GOP plan unveiled Wednesday, the increase would expire after four years and would not be retroactive, going into effect July 1.
A family with annual income of $60,000 would pay the state an additional $720 a year under the GOP tax hike proposal, with their tax bills increasing from $2,250 to $2,970. The four-year expiration date would coincide with a four-year property tax freeze that also is in the GOP plan.
The Senate’s plan originally included expanding service taxes on things like dry cleaning, hair styling, landscaping and streaming services like Netflix. There was also a provision to tax cable and satellite TV at different rates, something DISH network said would be challenged as unconstitutional because different rates would be set for similar industries.
The amended plan that passed by the Senate last month removed some of those services, but did include taxing tattoo and body piercing services. It also included raising the state’s corporate tax.
Jason Lee, owner of Springfield-based New Age Tattoos, said last month that piling taxes on his industry and his income is more of the same.
“We’re not the upper class, we’re the middle class, and the middle class always gets our neck stepped on and I think that’s just a commonality in the state of Illinois,” Lee said.
When a Senate committee passed the amended plan last month, some senators joked that tattoo shops don’t have lobbyists.
“You are going to hear our voices more and more as we get more politically involved,” Lee said.
If the tax increase passes, Lee said it’ll be another reason for small businesses to pick up and move across the border.
Ives said she’s worried the proposed temporary tax increases will lead to continued outmigration of businesses and citizens.
She also has a warning for her fellow Republicans.
House Speaker “Mike Madigan may just very well call their bluff and make Republicans look like they just capitulated to a $5 billion tax increase,” Ives said.
Rauner said Thursday when announcing a special session to take up the GOP’s “Capitol Compromise” plan that includes the $36 billion spending levels reliant on tax increases: “We must do it because if we don’t, the ramifications for this state will be devastating and long lasting.”